 Aloha and welcome to Business in Hawaii with Reg Baker. We're a show that broadcasts live every Thursday from 2 to 2.30 and we discuss popular topics with successful companies, how they made it work here in Hawaii, how they overcame some of the obstacles and there are many but there are also a lot of success stories here too. There's also companies that help support successful companies and today we're going to have one of those companies that's actually done both. They are successful unto themselves but they're also helping other companies become successful as well. So I've got Matt Delaney, he's the CEO and the president of the Hawaii group and we've probably heard a little bit about them in the past but Matt's here to tell us the rest of the story. Welcome Matt. Thanks for having me Reg. Of course. It's good to have you back. You've been back for a little while now haven't you? Yeah, since August. All right August so shoo that's almost a year. It is. It's coming up on pretty quick. It's flying by too. All right. So how, you know, give us some background, how has things been going? They've been good. So back in August of 2016 my partner and I sold Hawaii Human Resources, HIHR, to a competitor and so ever since then I've been spending more time here working on that transaction as well as now focusing on the other entities at the Hawaii group owns. Right. It's a piece of the Hawaii group and I guess it was a lot of effort to kind of make that a smooth transition over to the new owners. It sure was. You know, if you ask me we never intended to sell it and to our competitor and offer came by and sometimes you just can't say no to and it worked out well. They're a great company. We really wanted to protect our employees, our clients. You know, we had great service. We did a lot of great things. Pro Service did a lot of great things. I think now with the combination together they're even more powerful and it happened really quickly in 60 days. Very quiet. You know, we didn't want to disrupt the operation and we had it basically a turn key operation. So it's pretty transparent I guess for the customers. For the customers absolutely and staff came in on Monday and you know, Ben Godsey, the CEO of Pro Service came in and welcomed everybody and business as usual. You know, new owner, new person paying their paycheck but the clients, no interruption in the service and that was the most important part to us. Yeah. No, you don't want to leave a bad taste in anybody's mouth. It's always good to have that be transparent and run smoothly. So congratulations on that. Thank you. All right. But I guess now you've got a Hawaii group that's got a big chunk of it. It's kind of gone. That's allowing you to focus a little bit more on some other things. Yeah. So the Hawaii group also owns a bunch of other companies. Hawaii Employment Services, known as HI Employment, staffing, recruiting, executive placement. We have HI Accounting, which does bookkeeping, financials, taxes, full service. And then we have two healthcare companies, Hawaii Nursing and Hawaii Home Care. And they all kind of, again, support other businesses. Hawaii Nursing, for example, we provide nurse staffing to Queens, HPH, state hospitals, the correctional facilities. The HI Home Care we do, in-home care, medical, non-medical. Our clients are the insurance companies, the schools. It's really kind of dynamic and such a growing part of the industry in this business. And people are living longer. They're needing more help. Fast forward. I think we're all going to live till we're 100 years old. Well, absolutely. I think even some of the life insurance charts are going out to 110 and 120 now. I mean, the demographics are moving in the direction of longer life. And coming from the healthcare industry myself, I know that as you get older, and fortunately we live longer, but there's also health complications that come with that. And things have to be addressed and monitored. And so I see this home care piece of what you're doing as tremendous growth capabilities. It really does. And some people, very severe needs. For example, when some medically fragile children are discharged from Capulani, then we go service them in the home and take care of them. We deal with a smile, with dignity. These are fragile kids that are on tracts and other things. And the other end of the spectrum is, as you get older, you need a companion or you want somebody to help you take to the store, conversation, help you do errands and kind of everything in between. But we're all going to need help down the road. Some people have family around them and some don't. Yeah. And unfortunately in today's world, you've got children that are going to the mainland and they're not here. And they need to know that their parents or whomever are safe and they're to be taken care of. And that you provide that type of comfort for them. We do. I would imagine you interact with the children fairly often as well as the parents that you're helping. We do. And you know, that's why we do it too. It's great to improve somebody's life and these children really born sometimes and or came through other complications. And if we can just make things a little bit better for not only them and their families, that's what makes it all worth it. It helps the whole living environment improve. Yeah. Now, let's switch back a minute for the, on the employment side. We'll just touch base on that. I mean, what type of employment or people are you looking for to place into the different companies? So we, you know, we actually do it all. We started with, you know, your typical staffing office, you know, financial people and really wanted to diversify, you know, Hawaii is such a big place and a small place at the same time. And we really made an effort to diversify from the beginning so that if tourism went down, if construction went down, that we wouldn't be impacted. So we actually do the majority of the agriculture workers, like on the island of Kauai, we do transportation. So the rental car companies, we do hospitality and at the convention center. So we really kind of do construction, anything and everything. And what helps us is at some point in the year, every company needs somebody, whether their assistance going on maternity leave, whether somebody resigns and moves, whether somebody's sick. And so we want to be that company that provides that. And so, you know, we source basically every industry. And right now today it's tough. It's very tough to find people in all industries. I would imagine. I mean, I'm hearing that the unemployment rate is down less than 4%, you know, which back in when I was going to school, taking economics, full employment was considered 4%. Right. And so we're less, however you want to say it, but we're more than full employment, which means it's very hard to find good people. It is. You know, we always try and source here first, keeping it local. We're actually now working with the universities to really try and not only create internships, but programs where people enter college and they're already thinking about what they want to be doing when they graduate to try and keep them here because so many of them are lured away onto the mainland. And then we lose great talent. And, you know, to source people from the mainland here, which we often have to do, you know, you're kind of a person that's starting their career, maybe doesn't have a family yet. It's a lot easier. The other end of the spectrum, you know, you're executive that is very affluent and can afford everything since Hawaii is such an expensive place to live. It works, but the majority of the people that move here from the mainland, it's a tough place. It's expensive. Again, jobs, depending on the type of industry, we don't have as many opportunities as the mainland. It's tough for kids. The educational system is different here. And so there's a lot of dynamics to actually get somebody. It sounds so great to move to Hawaii. And you get here. And then kind of the culture shock, the beach is great, the hiking's great. But at some point, are you able to acclimate and really? The novelty wears off. Yes. And I know, you know, I was a trustee at Queens for quite a few years. And same thing with doctors. It's hard to get people to come here because of some of those issues. And but the people that are successful, right, they love it. And they want to be here forever. And hopefully that aloha and aloha spirit will help attract other people over here. And one of the challenges that I always had when I was running international operations for the Bank of Hawaii is that we bring people in from the mainland. And the people that worked at the bank would usually be successful and very comfortable. But it was the people that weren't working that were staying home. The spouses and the children would always, not always, but occasionally they would not fit in. They wouldn't be comfortable. They'd want to go home. And that would be a drag on the employee or the manager that we had in the play. And they'd eventually all end up leaving. And so the turnover, the success rate for these management positions were actually pretty low. And in today's paper, in the PBN, they had a story about how it's necessary to go to the mainland and recruit senior executives to have them come in filled positions here. And there were some individuals that were interviewed and said that, yeah, you have to go to the mainland and find that talent. I can't help but think that we've got some talented people here. I mean, do you agree with the theme of that? I mean, does it make sense that we have to go to the mainland to get all our talent? Or do we have people here that can do it? We don't have to. And again, I think most people's preference is to find somebody within, not only maybe already in the organization, but already here in the state again, because then you don't have that element of them potentially not enjoying it here or not liking it. But of course, as big as some of our industries are here like healthcare, we only have so many hospitals. And so to get somebody with very, very senior experience and administrator, there's only so many people that either have that background or have that capability. So there's definitely certain industries that you're going to look at a huge medical system on the mainland and try and see, you know, who that expert is, is a CFO or so. It's not always that easy. But again, I think the more we can be proactive here and trying to training and on the education side is keeping people here. I think is the ultimate goal. Well, and you had mentioned that you're trying to build relationships with the universities to help at least at the entry level. And if you're talking about some MBAs or maybe some talent in the MBA programs. I know the University of Hawaii a couple of years ago launched an executive MBA program in healthcare. And I can't help but think that there's got to be some talent there that we can be plugged into. Yep, so we're actually working with the universities in different areas. Accountings one against some kids don't figure out what they want to do to help junior or senior year. Was it a recruiting event for UH recently? And there's some people coming in as a freshman and they know they want to be an accountant. And it's actually great to see that. Because you know most people get scared away from numbers and accounting. So when they know they want. Full disclosure, we're both accountants right? Yes, yes. I don't know if we're the typical CPAs, but yes, yes. We love numbers. So we love accountants, okay. Yeah, but yeah, there's some good talented young people that are going through college that know exactly what they want and they get right into it. Yes, and the benefit of the younger people is they're way more tech savvy than we are, right? So when we used to do accounting and there'd be manual ledgers, right? And audits and paper trails and folders and ticking and tying and tracing. And now so much of that is done electronically and the average kid coming out of school can run circles around us from that aspect. So it's, accounting is different today and auditing is different and tax is different than the old days when we had to go to books and look up how to book something and now it's right at your fingertips. It's right there. You just Google and get all kinds of answers but we're gonna take a quick break but I'm intrigued by the accounting and I know you got an accounting operation over the Hawaii Group as well. So let's plan on talking about that a little bit when we come back from break. Sounds good. But this is Business in Hawaii with Reg Baker. We're here with Matt Delaney today with the Hawaii Group. We're gonna take a quick 60 second break and we'll be right back. Hello, this is Martin Despeng. Please join me on my new show, Humane Architecture like the one in the back that you see by architect David Rockwood. The show is gonna be on Tuesdays, 5 p.m. here on Think Tech Hawaii in downtown Honolulu. See you then. Aloha Kako. I'm Marcia Joyner, inviting you to navigate the journey with us. We are here every Wednesday morning at 11 a.m. and we really want you to be with us where we look at the options and choices of end of life care. Aloha. Hey, Stan the Energyman here. Thanks for joining us on Think Tech Hawaii and I invite you to join me every Friday on Think Tech Hawaii at 12 o'clock where I give you all the energy news that's worth talking about here in Honolulu and I love to talk about hydrogen. So join us on Friday on my lunch hour here at Think Tech Hawaii. Be there, Aloha. Aloha and welcome back to Business in Hawaii with Reg Baker. I was so excited to get into the show today. I forgot to mention a couple things. One, we're broadcasting live from the downtown studios of Think Tech Hawaii in the Pioneer Plaza. Can't forget that. And secondly, we have small business week coming up that is a nationwide week long event or celebration of small businesses. We've got a lot of different events going on, small business administration is getting involved and having different types of training programs. The Maui Chamber of Commerce on May 3rd is gonna be getting into a, I guess an academy of training for small businesses. They're gonna be at the Maui Arts and Cultural Center and then the Chamber of Commerce of Hawaii on May 2nd, 4th and 5th also has a small business academy. So, and there's a lot of other events, a lot of different networking and other activities going on. So please plan on spending that first week of May out supporting the small businesses which is vital to our economy here in Hawaii. And we've got a, on the screen, we're showing one of the award winners for the SBA this year for the state of Hawaii. Just happens to be your host. And I was named the financial advocate for the state of Hawaii. So it was a great honor and I'm very humbled to have gotten that award. So thank you to the judges. But we're gonna get back to Matt Delaney here. We're gonna chat a little bit about the accounting service. Now you've got a pretty interesting opportunity going on in your accounting side of the Hawaii Group, don't you? We do and I'm glad that segment just aired because I wanted to congratulate you on all the great work that you do for the SBA and small businesses and you do a great job with that, Reg. Thank you. So we as small businesses appreciate it. Yeah, our accounting firm, H.I. Accounting, it really started off because our HR clients, we were doing complicated payroll and job costing and they said, hey, can you do our accounting? And all of a sudden it was, wait, I'm a CPA. Why don't we just start this up? And so H.I. Accounting was born and for the most part we were servicing H.I.H.R. clients and now we're starting to grow that and market that but really a comprehensive accounting firm from bookkeeping to financials to taxes. You know, we're not a, the great thing about our industry is we work so well with other accountants and many of our clients we're doing the bookkeeping and accounting for and we co-work with another tax firm, Vice versa. Everybody kind of has their specialties or the industries that they know well and so it's great I think as a whole our industry is growing rapidly and here in Hawaii 85% of all businesses have 19 or fewer employees and 89% of those have nine or fewer employees so those types of firms can't afford a payroll department and accounting department, a human resource department hence why the Hawaii group and its companies really built our business really to take care of those companies that can't do it themselves. And that type of service is critical because as you mentioned, we are a state of small businesses and when you've only got a few people that you got in a company, you know, there's limits to how much they can do and they've got to be focused on that revenue generation and customer support and that piece of it. A lot of that back office stuff sometimes gets neglected and that can be problematic for some companies. It does, it does. You know and one thing that I've always done with all of our businesses and HIA accounting is, you know, I've been in the other seat. I've been the client before. I've been the employee before and I always try and sit in the client's shoes to figure out what I like and what I don't like about the service that I'm being given and so we've really tried to make HIA accounting that company that will customize, again, we can do A to Z. You know, we can have some clients that don't even get their mail, we get their mail, we open it, we pay their bills, financials. You know, others were just doing a tax return. Others were just doing bookkeeping and GET returns but at the end of the day, these services that we're providing sometimes they're difficult, they're challenging. If it was easy, the clients would be doing it themselves. So, you know, we actually enjoy often the headaches of the accounting and figuring things out because if it wasn't difficult, then we wouldn't have jobs and we wouldn't be servicing our clients. So, we take that really seriously with our clients. And I don't want this to sound too strange but accounting is not a natural act. I mean, it's something you gotta learn how to do and not very many people are comfortable. I mean, number one, it's analytical, it's got a lot of numbers, it's very detailed and it tends to be repetitious and it takes a certain personality to be able to get in and enjoy doing that kind of work. Yes, absolutely. And you know, I think a lot of accountants you'd probably consider introverts and some people love, you know, head down and doing the work. Others love more of the client interaction but it's really such a great service in the aspect that traditionally, you know, a lot of the clients that we bring on board they're frustrated with, they're not getting timely financials and that's one of the reasons that they want to hire somebody like us. And that's very important. You've got to have the timeliness. It is really, cause right, financials, you're looking back and if they're not timely, you know, and two and three months goes by, you don't have time to make decisions and corrections to your business, it might be costing you money. So, we really try and look at it as, you know, we're sitting at the table with them, we're helping give them support so they can make real time decisions so they can impact their business today and really looking forward, budgeting, projections, really being their advisor and helping them with some of these business decisions. Cause again, looking back is great. You can see how you're doing but if you need to make an adjustment to your business then two, three months down the road, it could cost you. You know, I always get a kick out of talking to some people and they say, well, I have quick enter, I have quick books and I can cut all my own checks. Accounting is a lot more than that. It's actually, you know, all that does is provide you with some very basic information but how you use that data and how you can make some decisions based on that data to become more profitable or more cost conscious, that's the key to what you're really trying to get to. Absolutely, that's the value added service and that's really what we try and do in our focuses. So if somebody was out there and they wanted to talk to somebody about getting some additional support, how would they go about doing that? In regards to hiring an outside firm. Well, they come to you, if they pick up the phone and call you or can they go online and get some information? Yeah, you know, they can go online. Our website is hi-accounting.com. You know, every business is different so it's really hard to really educate people on how we can assist their business but again, inquiring email, phone, fax but it's really getting around the table with that client and understanding where they need improvements, maybe where their weaknesses are and how we can help. And again, what we're known for is customizing because no two companies are alike. Everybody does something different, different cultures, different personalities and again, we like to be there. Hopefully we're adding value and similar to human resources and outside accounting help is, the roofer is great at fixing roofs, building roofs, providing bids on roofs. They're not making money doing the back office support. So the more they can get a trusted kind of partner advisor to do this work, generally it allows them to do more time to grow their business, to service their clients because again, at the end of the day without clients in the service that we're providing or a product you're selling, you know, none of us have a job. I think you raise a very important part of the process is that you really have to get to know the client and you have to have an onboarding process, not only for you to learn about the business but also for them to get comfortable with you and how you operate and then how all of that is gonna provide them the information that they need to be better managers. You're right and at HIHR we had a full implementation onboarding team and we're getting to that size now at HI Accounting where that's one of my focuses and again with HI Accounting I just stepped back in, I'm excited about it, I'm passionate about it, I've been very hands off until now and you know with my background it's again, taking care of that client and bringing them on is so important in accounting. You know you're using different systems, I haven't had one client come on board that let's call it cleanup that needed to be done and that's the challenge sometimes and that's really the key is to get transition and migrated the right way because you know if you do it wrong at that point you're gonna be off. You set the foundation wrong and you're not gonna have a very strong house. You know so you gotta get started in the right way. Yeah. Yeah that's very good. I guess the ongoing you know value add is to take a look at the results of all of this and interpret that and make sure that the owner manager has an understanding of it and can act on it and I would imagine you can even provide some support on what actions they need to take. Yeah you know a lot of our clients now are actually coming to us for that. You know your typical small business or medical practice, law practice you know it's hey should I be an S corp or should I be an LLC? You know I need help with my office lease. You know never entered a space before. Banking relationships. I'm gonna hire an employee. I need to bring some other additional staff. Right. I mean that can be intimidating. It really is and you know on the human resource and payroll side such liabilities today for doing something wrong. Very punitive. So to have somebody getting you going is right and again a lot of our clients are coming to us for that reason not just for bookkeeping or accounting. It's kind of that overall business support to get their business set up right to help them get going and again suggestions and what's great is when clients come to us that acknowledge hey I'm not an expert at this and this is why we want you to do it and I think they really appreciate what we're doing and that's what we really appreciate doing. It makes a big difference when you've got a client that values what you're doing and understands it. And that's always a comfortable relationship to have. Now another piece that's usually a fairly big size of the income statement as an expense item is taxes. I mean taxes can be pretty big depending upon your level of income. I mean you can be paying 30, 40% or more in taxes. You can help with that too right. We can and you know this time of year Regs thankfully the IRS gave us a couple of day extension until Tuesday the 18th but this time of year very little sleep, a lot of coffee, a lot of diet cokes but yeah taxes is another thing it's so complicated. Laws are changing every year and again severe penalties if you're late, if you do things wrong. For everybody watching the show you know Tuesday's coming around the corner. If you don't have all your ducks lined up you should probably think about filing an extension but that's absolutely a major part of the business and part of our growth strategy. What's unbelievable is we've grown 384% in the last two years. And very little of that has been taxed. So my focus really is growing the business and we're gonna do that organically but also through acquisitions and create some more economies of scale. So and this is all within Hawaii? Yep, we don't believe in offshoring jobs to other countries. Firmly believe that people should be here and we're committed to that. So our employment rate probably gonna drop to around two and a half pretty soon? Yep, absolutely. Well Matt it was a pleasure to have you on board. I think we've got enough to talk about that we might have to come back and revisit this in a month or two and talk some more about some of the other things you got going on. Great, we'd love to. Yeah, it'd be fun. But this is a business in Hawaii with Reg Baker. We broadcast live every Thursday from 2 to 2.30 from the downtown studios of Think Tech, Hawaii in Alululu. Please join us next week. We'll have another exciting guest. Until then, aloha.